Get Ready For A Debt Ceiling Debate Deja Vu

U.S. Treasury Secretary Jack Lew testifies before a Senate Banking hearing on "The Financial Stability Oversight Council Annual Report to Congress." on Capitol Hill in Washington, May 21, 2013.
REUTERS/Kevin Lamarque
WASHINGTON (AP) — Congress needs to raise the debt limit and take away the "cloud of uncertainty" about the nation's ability to pay its bills, Treasury Secretary Jack Lew said in an interview broadcast Sunday.

"The fight over the debt limit in 2011 hurt the economy, even though, in the end, we saw an extension of the debt limit. We saw confidence fall, and it hurt the economy," Lew said on NBC's "Meet The Press." :Congress needs to do its job. It needs to finish its work on appropriation bills. It needs to pass a debt limit."

Senior lawmakers on Capitol Hill are trying to come up with must-do legislation to keep federal agencies running after Sept. 30 and prevent the possibility of a government shutdown. At issue is what is normally routine: a plug-the-gap measure to fund the government for a few weeks or months until a deal can be worked out on appropriations bills giving agencies their operating budgets for the full 2014 fiscal year, which begins Oct. 1.

However, some Democrats don't want to vote to continue to fund the government at new, lower levels mandated by the automatic, across-the-board spending cuts known as sequestration. And some conservatives are making a last stand against President Barack Obama's new health care law. In addition, Senate Democrats are resistant to a $20 billion spending cut sought by many Republicans.

The issue has divided Republicans between those who think it's appropriate to use the threat of a government shutdown as a negotiating tactic, and those who don't.

Rep. Peter King, R.-N.Y., said Republicans should be searching for ways to de-fund or repeal the Obama health care act. But he called threatening to shut down the government "terror politics" and said the strategy wouldn't work. Others have worried that the gamesmanship could cause Republicans to lose control of the House.

Some observers say it's an idea doomed to fail anyway, since Obama brings both a veto pen and the White House podium to the battle.

"We should not be closing down the government under any circumstances," King said Sunday on CNN's "State of the Union."

Sen. Mike Lee, R-Utah, has taken just that tack, rounding up fellow conservatives to pledge to oppose any budget extension that funds implementation of the health care law. Sunday, he said it was unfair to implement a law that many Americans don't want and that still has wrinkles that need to be ironed out.

"I understand that there's some in the Washington establishment, some from both political parties, that weren't happy with me over this," Lee said on "Fox News Sunday." ''And in this instance, I'm going to take that as a compliment, an indication that I'm doing something right."

"The fact is that we can delay this bill," he added. "And if we can delay it, we can stop its consequences, at least for now."

Lew maintains that the president won't negotiate over the debt limit.

"The mere fact of negotiating over the debt limit, after 2011, would introduce this notion that somehow there's a question about whether or not we're going to pay our bills, whether or not we're going to protect the full faith and credit of the United States," Lew said on ABC's "This Week with George Stephanopoulos." ''Well, it's not OK to default. Congress can't let us default."

"(Congress) has to stop looking for what's the last possible moment," Lew told "Fox News Sunday." ''They should get back after they take their time off in August and they should finish their work and get it done so that there's no uncertainty about America's ability to pay its bills."

Separately, Lew said no federal bailout is in the works for the city of Detroit, which recently filed for bankruptcy protection. Pressed as to why the government chose to bail out big banks, the auto industry and others, but isn't assisting the city, Lew said on CNN's "State of the Union" that the government has been giving Detroit technical advice and has made resources available to help take down blighted properties through federal programs.

But Lew said that the situation during the financial crisis that warranted the other bailouts was "unique," and that the current problems that Detroit has with its creditors, "it's going to have to work out with its creditors."